1982 (12) TMI 159 - HC - VAT and Sales Tax

Summary

Issues:
Identification of whether hair-dye is classified as a cosmetic or toilet preparation under entry 36 of the Andhra Pradesh General Sales Tax Act, 1957, determining the appropriate tax rate based on this classification.

Analysis:
The case involved a dispute regarding the classification of hair-dye under entry 36 of the First Schedule to the Act. The Sales Tax Appellate Tribunal had categorized hair-dye as a hair lotion falling under entry 36, subjecting it to an 8% tax rate on the first sale. The petitioners, engaged in manufacturing soaps, chemicals, cosmetics, and cattle-feed, contended that hair-dye should not be considered a hair lotion and should be taxed as general goods at 4% on every sale point.

Entry 36 of the Act lists items like face powders, talcum powders, hair tonics, hair oils, hair lotions, among others, under cosmetics and toilet preparations. Both parties agreed that if hair-dye were to be classified, it would fall under the item "hair lotion" within this entry. However, the term "cosmetics and toilet preparations" was not specifically defined in the Act, leading to a debate on the interpretation of these terms.

The court referred to various legal precedents and dictionaries to understand the common commercial interpretation of terms like "lotion." The definitions highlighted that lotions are typically medicinal preparations applied externally for skin disorders. In contrast, hair-dye functions as a coloring material for beautification purposes, specifically to darken gray hair, rather than as a medicinal cleansing agent for hair or skin disorders.

Based on the analysis of the nature and purpose of hair-dye, the court concluded that it does not qualify as a hair lotion within the scope of entry 36. Consequently, the order of the Sales Tax Appellate Tribunal was set aside, and the tax revision case was allowed in favor of the petitioners. The judgment emphasized that the application of hair-dye for cosmetic purposes did not align with the definition and intent of a hair lotion under the Act.

In conclusion, the court's decision clarified the distinction between hair-dye and hair lotions based on their intended use and properties, providing clarity on the taxation treatment of such products under the Andhra Pradesh General Sales Tax Act, 1957.